Analysis: Development Trend of Valve Future in China
                                        Column:Industry Dynamics Time:2016-05-26

                                        As a new type of Chinese valve market, China's valve demand potential and explosive power will be astonishing. According to the current forecast of Watts Industrial Group, the world water treatment equipment giant, the annual demand of the valve market in China is less than 10 billion yuan.

                                        According to the scientific concept of development, in order to ensure coordinated economic development and improve people's livelihood in the future, China must put infrastructure construction, such as water, electricity, gas and heat, at the top of the list, which is precisely where valves are used. First of all, China's South-to-North Water Transfer Project, only 70 km from the suburbs of Beijing to the urban areas, the value of valve procurement is as high as tens of millions of yuan, so the demand for valves for the whole South-to-North Water Transfer Project can be imagined. Secondly, in order to solve the problem of electricity shortage, the large-scale construction of hydropower projects in Ma is not only the top priority of the Chinese government, but also a long-term task.

                                        In addition, there are many projects such as West-to-East Gas Transmission, old industrial base transformation, urban pipeline network construction, residential projects, sewage treatment, farmland water conservancy and so on, which will trigger the huge demand of valve market.

                                        However, in the face of such a huge future market, how many orders can Chinese valve manufacturers share in the competition with foreign capital, and how big the gap between them are, I am afraid that the Chinese valve manufacturers are most concerned about these issues.

                                        First, the gap in brand influence. According to the data, many foreign valve manufacturers in various professional fields, their brand effectiveness has been significantly ahead of domestic enterprises. In the water treatment industry, including VAG, Watts and other brands in Germany, they have already established the leading position in the market; Velan is the absolute leader in the power industry; Fisher and KTM in the petrochemical industry can be seen everywhere; and in the high-pressure engineering industry, the words "Fisher" and "KTM" in Japan can be seen everywhere. In other words, engineers first think of Uhde and BASF in Germany.

                                        Second, the gap of industrial structure. China's valve production enterprises are too small in scale and too low in industrial concentration. According to the data of Watts Company, there are about 3000 valve manufacturers in China, ranking first in the world. However, most of them are low-level, small-scale, family workshop-type enterprises, with annual sales revenue of less than 500 million yuan, annual sales revenue of more than 100 million yuan only a dozen enterprises, market share of the top 10 enterprises only 8%-9% of the total market share. Due to the low degree of industrial concentration, there are many unfavorable factors, such as backward technology, low price competition, lack of influential brands and so on. So far, there is no real brand name in such a huge Chinese valve market.

                                        Third, the gap in the degree of specialization. As a general pipeline equipment, valves are widely used in many fields, including water conservancy and hydropower, urban pipeline network, petroleum and petrochemical, sewage treatment and other industries. Due to the different conditions of different industries and projects in terms of working conditions, media and seals, the technical requirements for the types, materials and pressure grades of valve equipment are also different, which also results in further market segmentation of valve equipment for different industries.

                                        In this case, valve manufacturers have chosen a professional development path, they are not satisfied with the production of a single valve equipment, but through product line expansion or seeking cooperation, committed to providing the overall solution for the entire project. Watts is a typical example. At first, they only produced valves for water treatment, but now they can even build a water plant independently.

                                        Fourth, the gap of the whole industrial chain. As a kind of mechanical equipment, valve production is in the downstream of the entire industrial chain, including steel, sealing materials, and the level of development of mechanical processing industries will have an important impact on the technical parameters of the valve. The strength, ductility and corrosion resistance of steel directly affect the high pressure and corrosion resistance of the valve; the production level of sealing materials determines the medium and pressure that the valve can withstand; and the precision of mechanical processing is an important factor affecting the sealing grade of the interface seal, the valve head and the valve seat.

                                        In our country, there is a certain gap between these technologies and those of foreign countries, which also leads to the restriction of domestic valve manufacturers when they produce high-grade products.


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